The impact of Bernie Sanders is becoming the topic of 2016. Folks everywhere are marvelling at the popularity of his ideas. They're so mainstream! What is this democratic socialism he's on about? This diary series will explore the outlines of Bernie's economic philosophy. We will do so using an oldie, but a goodie, the post-WWII British economist E.F. Schumacher’s Small Is Beautiful (1973). It is subtitled "Economics As If People Mattered."

We will follow the four parts of the book very closely and attempt to tie it to Bernie's economics, beginning in part two and onward.
Have no fear: there's no technical language, or math, or any Marx. Well, it's a long-form essay and the language is from the 70s, but so am I :=)
Please follow me for more below for the democratic-socialist corrective to the dismal science.

Might as well listen to Jack Johnson, eh.

Let's get to it, eh? Why is democratic socialist economics so important today?

It is clear to progressives that corporate capitalism has failed the people of the developed world since the 1970s, and, more importantly, is destroying the environment and driving climate change into the sixth great extinction. However, corporatist liberals and conservatives are not persuaded. Capitalist conservatives deny climate change itself and think a capitalism badge is required for entry into Ayn Rand's heaven. Capitalist liberals, such as the DNC and the "centrist" Democratic Party members, accept climate change, while thinking that capitalism itself could still be reformed to serve human needs and curb climate change.

I foresee the 2016 Democratic primary creating a fork in the road for Democratic Party capitalists and Democratic Party socialists. For now, welcome to the only economics fit for human sustainability.

In 1973, British economist E.F. Schumacher wrote Small is Beautiful – Economics as if People Mattered, a book that offered a vision of an economy driven by a desire for harmony, not greed; a local economy based on community and ecological values, not global financial derivatives. In the 1970s, “Small is Beautiful” helped launch a back-to-the-land movement that is the ancestor to the Local Food Revolution of today and the global Transition Network.

Don't buy books new. You can find the text online.
Please don't search with gargle: try www.duckduckgo.com instead.

1. The Modern World
2. Resources
3. The Third World (now called the "emerging world")
4. Organization & Ownership

This diary summarizes Part One: The Modern World, which contains five chapters.

Schumacher begins the book by making a foundational statement:

One of the most fateful errors of our age is the belief that "the problem of production" has been solved.

What he means by that is that modern humans consider themselves apart from nature, set up against it, to dominate it and exploit it through production. Humans have come to believe that they have unlimited power, nourished by scientific and technological advances. But, he says, this is an illusion.

A business person would not consider a corporation to have solved its problems of production and to have achieved sustainability if she saw that it was rapidly consuming its capital. However, we overlook this vital matter when it comes to the biggest business of all, the economy of Spaceship Earth. And, in our case, the economies of its rich passengers.

He uses fossil fuels as an example. Remember that he wrote just at the beginning of OPEC's extortion racket in the 1970s. The problem is that fossil fuels are treated as an income item on the balance sheet, instead of as a capital item. If it were treated as capital, there would be considerable effort to conserve it and towards building up a fund towards it's eventual replacement. Instead, it is being squandered as fast as possible by this misunderstanding of its nature. However, fossil fuels are just an example of a wider problem.

Fossil fuels are one piece of nature's capital, which we steadfastly insist on treating as expendable, as if it were income, and not even the most important part.

Schumacher would not be surprised to hear that we have begun the sixth great species extinction.
He notes that people are waking up to this reality, and he would appreciate today's environmentalists, but that the problem is quite advanced.

People have been living on the “capital of nature” for quite some time now. Plus, there has been a qualitative jump lately. Scientists have been compounding substances (think Agent Orange, Monsanto's Roundup, and Monsanto in general) against which nature is defenseless. We had thought these chemical compounds and GMO products were our greatest successes, until we began to realize just how much of nature's capital stock is being depleted. Other "successes," he warned - presciently, before Chernobyl and Fukushima - like the nuclear industry would turn out to be poisonous beyond our wildest imaginations. The storage problem of nuclear waste is still not, and will never be, solved. Our greatest successes have contributed to our greatest problem; the depletion of nature's capital. And for what?

He points out that GDP does not measure the substance of humans, and that this has been devaluated by our progress. Schumacher notes that the modern industrial system consumes the very base on which it has been erected.

To summarize so far, he notes:

To use the language of the economist, it lives on irreplaceable capital, which it cheerfully treats as income. I specified three categories of such capital: fossil fuels, the tolerance margins of nature, and the human substance.

Here are some of the philosophical underpinnings of corporatist capitalism:

a) universal prosperity is possible
b) and it is possible on the basis of the materialist philosophy of 'enrich yourselves' (this is expressed in the myth of the "invisible hand" of the "free market")
c) this is the road to peace

I was raised to believe this as well as in the tooth fairy.

Schumacher takes this philosophy to the woodshed. His first question is:

Is there enough to go around?

Consider the economists, the powerful, and their paid-for politicians, who all clamour for continued economic growth. Are they ever going to say, that's enough now?

Well, perhaps, says Schumacher, this philosophy can be made to work if everyone only has "more."
And he investigates this proposition using the example of fossil fuels.
He comes to the sad conclusion the even just "more" will not work over the long term.

Economic growth seems unlimited when viewed by economics, which only considers the basic sciences, such as physics, chemistry and technology. But economics plainly ignores the higher sciences. Economic growth must run into massive bottlenecks when viewed from the higher sciences, such as the environmental sciences.

An attitude to life, which seeks fulfilment in the single-minded pursuit of wealth - in short, materialism - does not fit into this world, because it contains within itself no limiting principle, while the environment in which it is placed is strictly limited.

Already, the environment is trying to tell us that certain stresses are be coming excessive. As one problem is being "solved," ten new problems arise as a result of the first "solution." As Professor Barry Commoner emphasizes, the new problems are not the consequences of incidental failure but of technological success.

Schumacher questions the philosophy of unlimited economic growth on two material grounds:

- the availability of unlimited natural resources, and,
- the capacity of the environment to cope with this scale of interference.

He also questions unlimited growth on non-material grounds:

If human vices such as greed and envy are systematically cultivated,
the inevitable result is nothing less than a collapse of intelligence.

Further, he dismisses the notion that the grave social ills which beset rich societies can be solved, if only we get a really able government that follows the best practices of corporatIST capitalism.
He could be talking about the West today. Look at what we have wrought when successive governments have simply tried to make, as Schumacher says, "faster use of science and technology or a more radical use of the penal system."
All we get are faster vehicles on the road to hell.

In the 2016 presidential election, look at the evident desires of both the Democratic Party and the Republican Party to give the electorate a choice between two candidates who both offer their party's "best practices" for corporatIST capitalism.
It is true that the Democratic preferred option would likely be better than the Republican preferred option. But that is a competition within a restricted worldview. One that is fundamentally flawed, based as it is on hyper individualism and externalizing the environment from the corporate balance sheet.
Both American parties offer only this:

"Your only option in 2016 is a capitalist: pick the one that would do the least damage and perhaps improve things at the margins of our capitalist universe."

Er, thank you, but no thanks. I mean, the political establishment's preferred options for 2016 are simply versions what Henry Ford said about the Model T in 1909: "The customer can have a car painted any colour he wants as long as it's black."

In response to the 2016 option of choosing between two capitalists, allow me to paraphrase Candidate Obama (remember him? :-):

You capitalists drove the car into the ditch. Now you want us socialists to push it out for you.

Schumacher says that what we need most desperately is wisdom: knowledge of spiritual and moral truth.

Nothing makes economic sense unless its continuance for a long time can be projected without running into absurdities.

He quotes Gandhi, who said that

Earth provides enough for every man's need,
but not for every man's greed.

Wisdom demands a new orientation of science and technology towards:

- the organic,
- the gentle,
- the non-violent,
- the elegant, and,
- the beautiful.

Peace, he notes, is indivisible. How then could peace be built on a foundation of reckless science and violent technology?

Schumacher says we need methods and equipment that are:

- cheap enough so that they are accessible to virtually everyone
- suitable for small-scale application, and,
- compatible with the human need for creativity.

Our present science and technology, meshed with our economic system, is geared to provide the opposite of all three.

The scale of the work ahead to change this towards systems imbued with wisdom is daunting.
Schumacher again quotes Gandhi's spiritual principles behind his successes:

There must be recognition of the existence
of the soul apart from the body,
and of its permanent nature,
and this recognition must amount to a living faith;
and, in the last resort,
nonviolence does not avail those
who do not possess a living faith in the God of Love.

Schumacher notes the uber importance of economic thought in modern society:

If an activity has been branded as uneconomic, its right to existence is not merely questioned but energetically denied.

A whole lotta other species on the planet would emphatically agree with this monstrous human "logic."
In corporate capitalist economics something is "uneconomic" when it fails to earn an adequate profit in terms of money. Schumacher underlines the fact that this kind of thinking means that an activity can be economic although "it plays hell with the environment, and that a competing activity, if at some cost, protects and conserves the environment, will be uneconomic."

He emphasizes something crucial about capitalism. it is inherent in the methodology of economics to ignore human dependence on the natural world:

In a sense, the market is the institutionalization of individualism and non-responsibility.
Neither buyer nor seller is responsible for anything but himself.

Every science is, of course, just fine within its proper limits, and every science more or less accepts its proper limits. Except the social science of capitalist economics, which completely fails to realize that it is derived from what Schumacher calls meta-economics. This is related to one's (or, society's) worldview, or philosophy of life.

It is the underlying matrix that provides a science with it's basic principles. An example of a misleading half-truth that is a founding principle of corporate capitalist economics is the so-called "rational actor" of economics. I have a B.Com, majoring in Business and Law. I remember my Econ 101 professor giving us the "rational actor" spiel with such confidence that I just gullibly believed it. By my last year though, I knew it was bullshit.

Economics is so powerful because it relates to, not only Maslov's hierarchy of needs, but also to the human drives of greed and envy. (No, Gordon Gecko, greed is not good.)
Because it is so important, it is imperative for economists to understand and respect meta-economics.
For within meta-economics lies the higher sciences, like the study of humans and the study of their environment.

So far, and despite it's founder Adam Smith's warnings about meta-economics, the social science of economics has failed dismally at understanding either and still takes no account of them.

Therefore, Schumacher turns to meta-economics and does a thought experiment.

He is quick to point out that the choice of Buddhism is incidental; one may as well have chosen any of the world's enduring religions. I do suspect though, that choosing Buddhism makes things easier.
Buddhism carries far less historical baggage than the theistic religions, plus it has a far more realistic view of human nature, and it escaped the post-enlightenment nightmare of the supposed virtues of an extreme view of "individualism."

Schumacher notes that one of the Buddha's teachings was 'right livelihood', which would form the basis of Buddhist economics. In this kind of economics, the function of work is at least threefold:

1. to give people a chance to utilize and develop their faculties;
2. to enable them to overcome their ego-centredness by joining with other people in a common task; and,
3. to bring forth the goods and services needed for a becoming existence.

This has a myriad consequences.

One of them is that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and the bliss of leisure.

Another is that to organize work into boring, nerve-racking, meaningless ways is criminal.
Therefore, Buddhist economics categorizes two types of mechanization:

Schumacher says this about the definition of work:

Buddhist economics must be very different from the economics of modem materialism, since the Buddhist sees the essence of civilization not in a multiplication of wants, but in the purification of human character.

Character, at the same time, is formed primarily by a man's work.
And work, properly conducted in conditions of human dignity and freedom, blesses those who do it and equally their products.

Materialist, capitalist economics is mainly interested in goods, whereas Buddhist economics is mainly interested in liberation. It doesn't oppose wealth, what it opposed is attachment to wealth, not the enjoyment of things but the craving for them.

Capitalist economists think that annual consumption is the prime economic measurement; more is better than less.
A Buddhist economist would say consumption is merely one measure of wellbeing:
Since consumption is merely a means to human well-being the aim should be to obtain the maximum of well-being with the minimum of consumption.

Capitalist economists try to maximize human satisfaction by the optimal pattern of consumption, while a Buddhist economist tries to maximize consumption by the optimal pattern of productive effort.
Maximizing consumption takes a great deal more effort and resources.
This leads to a great deal of stress, which is a feature of western societies.
The optimal pattern of consumption, producing a high degree of human satisfaction by means of a relatively low rate of consumption, allows people to live without great pressure and strain, and to fulfil the primary injunction of Buddhist teaching: "Cease to do evil; try to do good."

All of this means that Buddhist economics would prefer local resources and consider huge transportation costs as inefficient.

It is the same with great commuting distances. Buddhist economists, as opposed to capitalist ones, would pay great attention to the difference between renewable and non-renewable resources.
Non-renewable goods must be used only if they are indispensable, and then only with the greatest care and the most meticulous concern for conservation.

Schumacher deplores the heedless rush with which emerging economies are growing along capitalist lines, without concern for moral and spiritual values.

For it is not a question of choosing between "modern growth" and "traditional stagnation." It is a question of finding the right path of development, the Middle Way between materialist heedlessness and traditionalist immobility, in short, of finding "Right Livelihood."

This whole chapter is a treatise on the futility of giantism.
Materialist economics prize economies of scale and a great deal of time, energy, and resources are spent on mergers and growth in order to achieve it. Schumacher disagrees.

He says humans need two seemingly opposed things: freedom and order:

We need the freedom of lots and lots of small, autonomous units,
and, at the same time,
the orderliness of large-scale, possibly global, unity and co-ordination.

In action, small autonomous units work best, but in the world of ideas, the larger the thinking the better, especially around ecology. He says there is no one-size-fits-all solution, yet moderns have made an idolatry of giantism.

Therefore, it is vital to insist on the virtues of smallness. The idolatry of giantism has caused mass transportation and communication. These, he says, have had an enormous effect on people, namely mobility of labour: it has made them "footloose."

Millions of people start moving about, deserting the rural areas and the smaller towns to follow the city lights, to go to the big city, causing a pathological growth. One of the effects of these mass migrations is that it makes all social structures less stable and it is a fount of many of modern societies' ills.

In the poor countries, again most severely in the largest ones, it produces mass migration into cities, mass unemployment, and, as vitality is drained out of the rural areas, the threat of famine. The result is a 'dual society' without any inner cohesion, subject to a maximum of political instability.

And nobody knows what to do about them. Capitalist economics is all about scale, and can only produce development in massive cities with no regards for the human social costs of the process. We have to learn to think in different ways and then learn to teach that to everyone else.

Schumacher says people can only be themselves in small units.
Economics must learn to develop structures that can deal with lots of semi-autonomous small units.

Well, we made it through Part One of Small Is Beautiful.

I hope it provides some building blocks for understanding more about democratic socialism.
Next, we'll tackle Part Two on Resources.

It's all just common sense, isn't it? We can build an economics "as if people mattered."

Peace be with us, if we learn about and work for democratic socialism,
gerrit

* This is a top-rescue of a series I wrote in summer 2015, which was met with muted cheer and loud chill.